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CFO Yeah! Podcast

Chad Martin on 17 Years as CFO, MeridianLink’s IPO, & Financial Literacy

Patrick Whatman, Spendesk
Patrick Whatman Spendesk

“In my first CFO job, we created a monthly financial package that was over two inches thick, extremely unwieldy, and basically almost useless. Now, as we close the books, we send out an electronic flash report and leaders can immediately access the information that is of interest to them in real time.”

Chad Martin has seen the finance world evolve first-hand. After 10 years in investment banking at Goldman Sachs, Chad became a CFO, a role he’s held for 17 years in healthcare, energy, and software companies. Currently driving finance at MeridianLink, he spearheaded the company’s successful IPO in 2021.

In this episode of the CFO Yeah! podcast, we discussed the challenges occurring in the finance department when a company goes public. He also shared the changes he’s witnessed in the finance industry, led by the growing impact of data and digital tools.

Listen to the full episode on Apple, Spotify, or RSS. Here are the main insights and takeaways from Chad’s significant experience.

From teen entrepreneur to CFO

Growing up, I always had a job: lawn mowing, snow shoveling, babysitting… I had a knack for business and money. So, I decided to study finance and then went into investment banking at Goldman Sachs. I followed a pretty straight path into a finance career. 

Later on, I took a break to get my MBA, and then went back to Goldman. But I didn't really want to be a banker forever. Fortunately, I found a CFO role, which is what I've now been doing for the past 17 years.Today, I’m the Chief Financial Officer at MeridianLink. We’re a software company serving over 1900 financial institutions and consumer reporting agencies. The company was founded in 1998, and we went public in July 2021. Our mission is to democratize lending. This consists in helping people transparently access credit through our software and the institutions that we work with. Our solutions give credit unions and community banks the technology that they need to compete with larger financial institutions and the changing landscape of neobanks, fintechs, that are sprouting up today.

Behind the scenes of MeridianLink’s IPO

In 2021, we had the opportunity to explore the public markets, and it’s been a long journey! We often joke that the IPO process was akin to having a baby, because it took about nine months from start to finish. The IPO was the culmination of all the hard work that we'd been doing after the company’s acquisition by Thoma Bravo in 2018. We'd done several acquisitions and integrated those, in order to get to a place where we had all the systems, the infrastructure and the right team to go public.

In terms of the IPO, a large part of it truly is just processes. It's all about the registration statement, filing documents, and all of the preparatory work at the company to have PCAOB audits complete. Then, it’s multiple iterations with the SEC reviewing documents and processing comments.

Responsibilities as CFO of a public company

Since the IPO, I’ve been spending a lot more time with external constituents - mostly investors. We spend about a week every quarter just preparing for the earnings release, and going through the forecast. We also spend time preparing for the earnings call, reviewing the materials, and getting the board to sign off.

Once you have the earnings call, you then spend the next week in calls with your research analysts, calls with your top investors potentially participating in conferences or doing non-deal roadshows… I’d say going public added a lot of incremental activity to the CFO role. And of course, it constrains the time. 

But a lot of what you're doing in that planning, forecasting and guidance is making sure you're incorporating the strategy and communicating it clearly. A lot of the time we spend discussing with investors is about our strategic direction. So, it kind of reinforces the need for the CFO to always be sharp on those topics.

Financial literacy across the organization

I like to say that the finance team acts as the scorekeeper in the business. We report the score in terms of financial metrics for how we're doing. 

And I believe we can influence and improve this score! We use data to identify aspects of our business where we can do better. Then, we seek to find areas where we can directly influence and improve the outcome. 

For example, I'm a big believer that the finance team can have a drastic impact on sales. We're always selling the business to outside constituents: investors, debt agencies... Now that we're public, the role of CFO and investor relations is critical. 

Besides this, there are more subtle ways to steer the business. For example, we try to spend time enhancing the financial literacy of the organization, of our leaders and managers. If a manager doesn't understand the components of an income statement, it's really hard for them to understand how what they do is reflected in the financial results.

So we like to organize classes that really try to demystify and explain what drives the financial health of the business. And I'm actually surprised at how many people turn up - pretty much everybody shows up each time! So, it tells us people have a thirst to try and understand better what drives the financials in a business.

From Excel to specialized digital tools 

One of the biggest changes I’ve witnessed is that the tools we use continue to evolve, as more specialized software becomes available. I feel like when I first started all we had was our accounting package and Excel. Now, there's software for budgeting, forecasting, closing the month, paying bills, expense management… The list goes on! 

This has been great, because it's allowed the finance team to be much more efficient. We’ve reduced a lot of the drudgery of the tasks that used to be manual, by automating them. This also leads to better output, forecasting and scenario planning, along with better data for making decisions. 

In my first CFO job, we used to create a monthly paper-based financial package that was over two inches thick, extremely unwieldy, and basically almost useless. Now, as we close the books, we send out an electronic flash report and leaders can immediately access the information that is of interest to them in real time. 

But despite digital tools making a lot of things easier, all the data still has to be clean. That is probably the biggest issue we’ve to deal with. If you don't have good inputs, you can't have good outputs. 

However, I trust the data more. So now, if there's an issue with the output, it's really about going back and understanding what happened with the input, instead of worrying about the model being broken somewhere.

The dark side of data: new challenges for modern CFOs

One of the downfalls of having these better, more flexible reporting tools are the new expectations they generate. We’re now expected to conduct an endless amount of iterating on data. 

This can be really frustrating. On the one hand, we do have the flexibility and the power to allow for better data and analysis. But on the other hand, sometimes I think we get so busy just running scenarios that we don't stop, step back and internalize what we're actually seeing in the information that's already available.

So, the more you can do, the more you're asked to do it. Sometimes, it just becomes a vicious loop.

The forecasting pressure for public companies

We do have more pressure on forecasting stemming from the fact that we went public. In the past, in my forecast, I always understood that it's way better to come in a dollar over than a dollar under.

But now, the goal is to try and get as close to the pin as possible. That desire to be as precise as possible puts a lot of additional pressure on the business. In the past, we always had a little bit of latitude - being a little conservative was appreciated. Now, we want precision over all else.

The changing expectations of young finance professionals

I think nowadays, young finance leaders really want to focus on strategy and impact. They expect to minimize the busy work and to actually put the emphasis on analysis interpretation. This way, they can really feel like what they're doing impacts and improves the business.

We've had the good fortune right through the IPO process to tie a real tight bow to the activity that the team is doing. I think they were able to see that what they're doing every day is directly contributing to the improvement of the company. Personally, that’s also what motivates me every day. I want to feel like I'm not just reporting the score, but running it up and making the business better. 

Besides, in order to ensure our team stays happy and engaged, I definitely rely on my managers. They’re the ones who have the most day to day interactions with the team. They ensure that we’ve got good, engaging work for everyone.

We also need to constantly give each team member the support that they need - especially as we're now working in a remote-first environment. We're not in a position where we can stop outside someone's office and ask how they’re doing anymore. We need to be more intentional in connecting with folks, even if it's through an email or a chat. Hopefully, this creates that little opportunity for bonding.

I always try to make sure that people feel like they're connected to the work that they're doing. But also, that they feel connected to the broader business, beyond the day to day. I want them to feel that the options they have for learning, for growth, for additional responsibility in their current role outweighs what they may feel they'll get somewhere else.

One last piece of advice for young finance leaders

One of the greatest pieces of advice I’ve received over the years was to listen to all the voices in the room. Because sometimes, the strongest and best advice is delivered in a whisper, not in a shout. 

In my first CFO role, my CEO said to me: “we’ve one board member who's very quiet, but don't mistake being quiet for not being strided in their opinions. When that person makes a quiet suggestion, what's actually happening is they’re signaling very loudly that something needs to be done.”

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